Two in five families would fall into debt if the cost of their energy were to increase, according to the latest Household Financial Confidence Tracker from comparethemarket.com. If their energy bills were to rise, 44% of families with children at home believe that it would push them into debt with their energy provider– double the number (22%) of families without children in the house.
One in six (17%) families with children at home are in arrears to their energy provider, or have been, in the last twelve months with nearly one in ten (9%) still in the red. Nearly three in 10 (29%) are not currently in debt but are worried they will soon fall into arrears if cold weather and the ongoing lockdown continues to increase their energy usage. By contrast, only 8% of families without children at home are concerned about energy debt.
The research found that annual energy costs would only have to rise by an average of £85 in order to tip households with children at home into financial difficulty. However, Ofgem recently announced it would be increasing its energy price cap level from the current level of £1,042, to £1,138 – an increase of £96. For the 18% of families with children on a Standard Variable Tariff, and the 17% on a prepayment meter, the price cap increase could cause significant financial difficulty.
During the past few weeks of cold weather, energy usage amongst households with children has increased by more than 50%. The average household with children has kept their heating on for an average of eight hours a day, compared with an average of five hours a day before the cold snap.
Over a quarter (26%) of families with children at home said they had struggled to pay their bills over the last week. In addition, 23% of families with children at home said they are worried about their ability to meet their financial obligations over the coming weeks – compared to (13%) of families without children in the house who said they were worried.
Peter Earl, Head of energy,comparethemarket.com, said “Families have faced significant financial challenges throughout the pandemic, but this winter has hit budgets especially hard when it comes to energy bills. The added costs of more people in the house, both for work and schooling, means households with kids could be facing one of the most expensive quarters on record for energy. With the Chancellor set to give his Budget next week, the focus must not just be on rebuilding businesses and the wider economy but must also pay attention to how people can rebuild their finances after such a difficult year.”